How to Finance Your Franchise

(Franchise Buy) - By Tabitha. Updated Feb 10, 2011

How to Finance Your Franchise

Entrepreneurs looking for financial backing to buy a franchise can count on two things: lenders want to see strong business plans, and they expect borrowers to provide about a third of the total capital needed. Depending on the type of franchise, this could mean coming up with roughly $50,000 to $200,000 from savings, stocks, bonds, pensions, IRAs, property, and so on.

The International Franchise Association (IFA), the world’s oldest and largest trade group representing this growing business strategy’s leading franchisors and franchisees, also counts among its members many top lending institutions and financial advisors who note that there are several ways to secure financing to buy a franchise.

Franchisees generally have an easier time securing bank loans than their independent business owner counterparts, because they have behind them the established trademark and marketplace experience of their franchisor.
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Commercial Bank Loans and Independent Financing Specialists

Franchisees generally have an easier time securing bank loans than their independent business owner counterparts, because they have behind them the established trademark and marketplace experience of their franchisor. Banks generally point to lower default rates on franchise loans. In addition, several lending institutions specialize in franchise loans, catering almost exclusively to franchising, which is experiencing a 10-12 percent growth rate each year.

The Small Business Administration

The U.S. Small Business Administration (SBA) offers competitive rates and generally longer terms than other sources. Loans are typically made by a private bank or other lending institution, with a portion guaranteed by SBA. The agency offers many programs designed to meet a variety of small-business needs, including its popular 7(a) guaranteed business loan program. The low documentation loan program, introduced in 1994 to secure loans of $100,000 or less, is now the fastest growing SBA loan program.

The Certified Development Company is a private non-profit organization licensed by SBA as a lending source for small and medium-sized businesses that need financing for industrial or commercial buildings, machinery and equipment. Finally, Small Business Investment Companies (SBICs) provide equity capital and long-term debt financing, specializing in particular industries. Local SBA offices, franchisors or banks can help with this financing vehicle.

Many franchise companies either offer financial assistance themselves or help franchisees find a bank or other lender.

Direct financing from the franchisor

Many franchise companies either offer financial assistance themselves or help franchisees find a bank or other lender. Most have lists of bank and non-bank lenders with which the company has good relations, called preferred lenders. Less common are direct financing programs, loan guarantees or leasing programs for property, equipment and working capital, but it pays to inquire, because some franchisors do offer the option.

The U.S. Small Business Administration (SBA) offers competitive rates and generally longer terms than other sources.

Miscellaneous

There are other financing alternatives available to franchisees, each with its own set of advantages and disadvantages. Business and Industrial Development Corps. (BIDCOs) provide long-term debt financing to small businesses, and are operated under state programs with federal guarantees, but exist in only a handful of states. Venture capital firms generally specialize in certain industries and look for a high-return on investment, short pay-out and a good share of the business, with fixed buy-back terms at a guaranteed price. Family and friends are an important source of financing for many new franchisees, as well.

USA Today: Franchising Today - Financing Your Franchise

NEW YEAR, NEW CAREER: FRANCHISES OFFER VARIETY OF OPTIONS

If your list of New Year’s resolutions didn’t include 'Start a New Career,' it’s not too late. After all, it’s not often you get a fresh, new millennium to play with.

Today, Dallas franchisee James Cassels continues to celebrate the New Millennium even though the champagne has run out and the confetti is in the recycle bin. In July, he launched a new career. In January, he’s still tallying the boost his new business got from Y2K partygoers.

After spending eight years running a family-owned aerospace company with his brother, Cassels sold the firm and purchased 11 Gingiss Formalwear stores from retiring franchisee Dick Witt who had devoted nearly three decades to building the enterprise. Gingiss, currently operating 240 U.S. stores, has captured about 10 percent of the $800 million-a-year formalwear business market, furnishing tuxedos to nearly a million people annually.

One of the biggest advantages of buying a business-format franchise is the 'system'—a program for distributing goods, services or both that has been developed, tested and associated with a trademark.

Franchising today spans 75 different industries, reports the International Franchise Association, offering concepts that range from computer services to quick-service restaurants to education and training franchises.

Skipping the Growing Pains

Buying a franchise from a retiring owner rather than starting from scratch offered Cassels numerous benefits. First, the profits that the former franchisee had created were already flowing. 'The company was well established, so I skipped all the growing pains that come with starting a business from scratch,' Cassels says. 'Mr. Witt already had an inventory, a loyal staff and a solid customer base. My role is to get to know everybody, go out there and drum up some new business.'

Cassels also has another advantage. Through an employment agreement, Witt has agreed to serve as his mentor for a few years, helping continue the learning process. 'I just knew he had what it would take,' Witt notes. 'When you spend your whole life nurturing a business, you want to see it succeed.'

Already planning to expand by three additional stores, Cassels long-term career goal is to grow the business with his wife, Nancy, and then turn it over to their son, Austin, now four years old. 'I love working with customers,' Cassels says. 'For me it’s very refreshing. I’m coming from working with nuts, bolts and screws to dealing with pins, needles and people. It’s been very positive so far.'

Scanning the Career Horizon

Some people have the discipline to set and achieve their life’s goals, others constantly scan the career horizon for the perfect opportunity.

When the right career opportunity appeared on Mike Gilliam’s horizon, he turned from the traditional college-degree path and never looked back. It took no scholar to figure out that his part-time job stocking shelves at a grocery chain offered few career prospects, but when a fellow worker returned to the store asking for his old job back because he was earning less with his new college degree, Gilliam got the message and quit the ivy-covered halls the very next day.

About the same time, a friend who was a franchisee of Rainbow International, introduced him to franchising. The indoor restoration and cleaning chain, which has more than 300 U.S. locations, provides a variety of services from upholstery, drapery and carpet cleaning, dyeing, and deodorizing to fire and water damage restoration.

'I liked what I saw. Here was this friend making money in a simple business, and there I was in college,' Gilliam remembers. 'So when I quit school, I went to work for him part-time. However, I thought Rainbow presented a good opportunity and I decided to put the money together and invest in a franchise.'

At age 24, Gilliam had very little money, but he owned a sports car and had a friend with $5,000 in cash. Most importantly, he now had a vision of his future career. He sold the car, partnered with the cash-flush friend and bought a Rainbow International franchise. At first, the business produced enough earnings to pay their living expenses, but progress was slow and the partners eventually split.

Gilliam admits he made a few bad decisions along the way—like taking two months off to go sailing. After five years of hard work building a profitable business, he felt confident he could delegate his duties to others and hit the high seas. 'When I returned, I found out that some people had decided they didn’t need me. They had started their own business, and my business collapsed.' But the strong determination that first launched Gilliam on his career path enabled him to return and rebuild the franchise even bigger and stronger.

Today, 18 years after waving goodbye to his college professors, Gilliam oversees a successful franchise operation in Newport News, Va. that fields 12 vans and employs more than two-dozen people.

'I have exceeded my dreams,' Gilliam says. 'I have almost complete freedom.' What career advice does he offer? 'Buy a franchise. Follow the system and you’ll succeed.'

Investigate carefully before you invest, urges the International Franchise Association. Franchising is a proven business concept, but there are no guarantees to success.

*As seen in USA TODAY, compliments of Marketplace Today

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Franchising By the Numbers

By James C. Lawson

Kirk Fullerton fondly remembers how he and a team of colleagues were lured from a rival bank to their new positions with Compass Bank, a unit of the Dallas-based Compass Bancshares Inc., an up-and-coming big time player in the small business lending arena.

Like free agent sports stars, they were offered attractive deals and given a new, bigger mission: build a small business lending department that would be better than the one they left. “I remember when we first got here trying to get computers, hiring new people and establishing a department that could get up to speed quickly, Fullerton recalls. “We had been with First Interstate Bank of Texas. We left when Wells Fargo bought that bank. At the time, we were the largest volume lender in Texas.”

While Compass had launched a stand-alone credit approval unit to handle that type of business in 1992, it needed a spark. It needed a new focus, one that only a veteran loan officer who understood small business trends, franchising and how to make attractive but secure loans without falling prey to the woes of the marketplace. Creativity was a plus, but a strict adherence to tight underwriting standards was a must.

Fullerton joined the unit in 1996. Now, three years later as senior vice president of the Compass Bank SBA Lending Group, he has seen loan volume sharply rise from $8 million to more than $130 million and counting. In 1997, the lender ranked 116th in the nation with $67 million in SBA loans. A year later, it moved to 16th in the nation with $87 million in SBA loans and this year has risen to become the nation’s seventh largest SBA lender. Fullerton estimates expansion into new territory and loans to new first-time franchise operators will send the financial numbers even higher, possibly double the current loan volume, by year-end 2000.

The nation is undergoing a new wave of franchise development, contend financial experts. Franchising observers believe the timing is right for franchisors and franchisees. For franchisees the current market is exciting and offers excellent opportunities. They say the development is being fueled partly by new franchisors who seek opportunity when the economy is good, and partly by lenders who seek loan portfolio growth opportunities in a go-go bull market that seems to have more energy than the notable Energizer Bunny.

How do you describe a financing trend? It depends upon the financial players, the marketplace and to a certain extent, geographic region. Some lenders are offering flexible loan packages that require little collateral and security. Others, with the strong backing of the Small Business Administration are working closely with franchisors to offer franchisees the money they need to bring their business dream to fruition. Direct lenders are offering attractive rates, and more support services.

While few lenders are willing to call the current environment a soft market for franchise lenders, some suggest they are more willing to consider new concepts and first-time business owners.

Stable interest rates and competition help. Lenders say rates can vary depending upon the geographic region, the borrower, the terms of the loan and other conditions. Franchise loans can range from 11 to slightly above 13 percent. While few lenders are willing to call the current environment a soft market for franchise lenders, some suggest they are more willing to consider new concepts and first-time business owners. Some believe preferred SBA lenders may be more willing to make loans with franchisees because they may be more likely to succeed in business than some other types of small business owners. They cite franchisor support services such as real estate lease agreements, inventory control, training seminars and programs that offer more follow-ups than in the past. Additionally, many franchisors pre-qualify prospective franchisees and even refer and help prepare loan application packages for their candidates.

Compass is one of those lenders that is chasing franchisees with a conviction. While franchise operators are the target, those featuring new trendy concepts that exhibit the potential to become mainstays, the future McDonald’s, Burger Kings or Taco Bells are inviting. However, the growth-minded lender is not shortsighted.

“We have become more aggressive, we have expanded our relationships beyond what we did before,” explains Fullerton. “We work closely with such national operations as Subway, Blimpie and Blockbuster Video. We also work closely with regional operations such as Great Clips (hair salon), daycare franchises and numerous ice cream parlors. We started targeting the franchise market because we thought it would be best to expand beyond our core market.”

Compass’ major venture also calls for expansion into new geographic territories. The Compass logo is becoming known in Florida and in Arizona where it now has offices in Tucson and Phoenix. Atlanta is the next new territory where it wants to plant its corporate flag, partly because, “Atlanta is the number one market for small business growth. Phoenix is number two and Dallas is number three,” says Fullerton.

He adds, “We have been lending to franchisees primarily because the franchise concept is a good solid concept where the franchisor is there right behind the franchisee. Instead of having an 80 percent failure rate in the first two or three years as you usually have with a small business operation, the franchise fee is a tried and true test, and reducing the risk of failure is what makes it more attractive. With the SBA, guaranteeing 75 percent of the loan, your risk is only 25 percent.”

The franchise fee, he suggests, is an initial litmus test prospective owners must pass before they can launch their entrepreneurial dreams. The fee is an indicator that can signal financial commitment and a bit of financial security.

He’s not alone in his thinking.

Marvin Roffman, president of Roffman Miller Associates, a Philadelphia-based money management firm with more than $150 million under management, believes the lending climate has changed because the franchising arena has changed. For a 10-year-period that spanned the mid-80s to the mid-90s, the industry began to stagnate because of financial security problems. Some franchisees failed because they either were under- capitalized or did not get as much support from their franchisor. “It was a period of rapid growth,” he explains. “A lot of people got into business who should not have been in it in the first place.

“That has changed. The nature of business has changed, he explains. “Franchisors have tighter control. Because they have taken more responsibility, the franchisee now has a better chance to succeed. That makes them more attractive to lenders.”

“We started targeting the franchise market because we thought it would be best to expand beyond our core market.”

The most attractive are multi-store franchisees, he notes. Two of his firm’s major clients are multi-owners of GNC stores. They use Roffman-Miller to invest personal and company funds. “Multiple unit franchisees are the better bets. They are the more established owners who have gone through the rough times. They have a better idea of how to make their business work for them when conditions change. They also are the ones who have been in business longer. However, that’s not to say the newcomers can’t be successful.”

The major players on the franchisor side include giant GNC, which has launched a major commitment to expand its number of stores, to move into urban areas where it hasn’t been strong and to expand to smaller regions with fewer than 50,000 stores. Another company plan calls for it to open more co-branded units with Rite-Aid. Other major players include new and regional concepts such as the Dallas-based Wingstop Restaurants, Frozen Fusion, the Coffee Beanery, and a host of other fast food and office services companies that are capitalizing on the current economy and consumer needs for convenience. Observers are quick to note that this new franchise growth period is coming from the new kids on the block, or certainly from the lesser established companies.

On the financing side, direct-lenders like GNC that are determined to grow even if they have to finance that growth, and third-party lenders such as AMRESCO and FMAC are feeling the pinch of competition that threatens their piece of the financing pie. Then, not to be forgotten is the ever-emerging thrust from regional small, medium-sized and even large commercial banks and thrifts that covet and have devised plans to pursue their own share of the new small business.

“We have been lending to franchisees primarily because the franchise concept is a good solid concept where the franchisor is there right behind the franchisee.”

GNC already is one of the nation’s largest franchisors with more than 4,000 stores. It expects to have another 3,000 by year-end 2002. It also wants to ensure that it is the nation’s largest direct financer of franchises. “We are one of the few franchises offering lease signings and direct financing. Not many that offer one, offer those two services combined,” says J.J. Sorrentti, director of operations for GNC Franchising in Pittsburgh. “We do the financing and we carry the notes. We do it because it is easier.”

The number of GNC’s financing plans nearly matches the number of different types of expansion plans it has launching. For prospective franchisees who are interested in launching new business in small regions, it has its Expansion Market Program which allows owners to open stores in areas with 25,000 to 50,000 people for a mere $42,500 to $50,000. It has an urban expansion plan designed to put more stores in the inner city and it has a plan to add more co-branded stores throughout the country. Nearly 1,500 of its stores now are co-branded with Rite-Aid stores. Another 500 are expected by the year 2000. In the South it is putting GNC concepts into Harris Peter supermarkets in Virginia, North Carolina, and South Carolina.

Franchise fees for these stores vary. Franchisee pay $60,000 for a typical GNC. The fee includes a $32,000 franchise fee. For some stores, the cost is $70,000 to $90,000.

Innovation and a strong desire for sound growth is important in the current competitive environment, suggests Peter A. Mozer, FMAC’s chief credit officer and vice president.

Catering to established multi-unit operators, FMAC has developed a host of floating rate and fixed rate products to meet the financing needs of its target clients.

Some lenders are quick to note that prudence is important. Despite the increased competition, being selective has its virtue. Some are not interested in newcomers or franchise owners who don’t have a long term proven financial track record or are connected with a well-established franchisor. Some even look for operators that are managing a profitable business with at least $25 million to $30 million in revenue.

Lenders who cater to newcomers and the small franchisees are bringing excitement to the marketplace. While they may not be able to compete in volume with the larger lenders, they are becoming involved with the smaller franchises and are offering opportunities to people who would not be able to realize their business ownership dreams.

Wingstop Restaurants, a Dallas-based company with 14 franchises, doesn’t offer direct lending. However, it does have a list of preferred lenders who are willing to work closely with prospective franchisees. After prospective franchisees meet the initial $50,000 requirement, the company refers the borrower to Wells Fargo Bank or Transamerica. Loan packaging usually takes about a week. Approval usually takes about 30 to 60 days.

“It’s part of the first level of service we provide to the new person,” explains James Deering, director of franchising. “The person can either go to a bank they already deal with, or they could go to Wells Fargo. Their third option is to go to a loan packager who submits the loan application to one or more banks. Wingstop also helps to arrange lease agreements. The current rates, depending upon location, range from $11 to $20 per foot. Wingstop offers the services of a real estate negotiator.”

As long as the economy remains strong, franchising will flourish. For lenders, a strong economy means more opportunities to expand loan portfolios and enter new markets with potential for growth. To accomplish this they are willing to adjust some underwriting standards such as accepting lower down payments and lowering rates slightly to attract new business. “The economy has been good in all the markets we serve,” notes Fullerton. “That has contributed to quite a few success stories.”

For franchisors, a healthy economy means an opportunity to expand and gain a larger share of the marketplace. New companies can become more established and larger companies can solidify their position. Such an economy can help companies build their base with capable franchisees who have an opportunity to build financial stability during good times, contend industry observers.

For franchisees, a healthy economy means a time when they can realize their dreams of business ownership, an opportunity for expansion and an opportunity to lock in attractive loan rates. It’s a good time to be a franchise operator, say observers. Owning a franchise can be a pleasant experience because there often is more support, name recognition and there is a better opportunity to succeed.

Adds Fullerton. “When the economy is good everybody looks like a hero.”

Women and Minorities Strike Franchising Gold

By James C. Lawson

It was more than a weekly ritual. Angela Hendricks was on a serious mission to upgrade herself from Freeze Frame, a Miami shopping center kiosk where she and her husband Ray had produced computerized photos for two and a half years. Shunning a nursing career, she was determined to become a full-fledged entrepreneur.

The right company, the right product, the right concept and the right lender were not easy to find. But she was determined to find a nationally known franchisor that offered a complete package of financing, support services and a product or service that she and Ray felt comfortable selling. Could they succeed? Could they find financing for their dream?

Hendricks realized her task as an African-American female would be a difficult one. Could they find a franchisor who cared as much about customers as they would? After nearly an endless number of phone calls, numerous plane trips and many miles of driving across long strips of Florida highway, they narrowed their search to a nationally known sneaker company and the General Nutrition Company. The sneaker lure was strong, but GNC won out.

Now, nearly six months after ribbon cutting ceremonies at their Dunedin, Fla., strip center store, the Hendricks are preparing for another store they hope to open before the year’s end.

Franchising is almost in the blood for Ken and Aubrey Turner. This African-American couple practically raised their three children in a fast-food store. Originally from Philadelphia, their first experience came when Ken held a corporate position with McDonald’s in Upper Darby, Pa. some 20 years ago. A few years later, they ran their own McDonald’s store. Even after relocating to Colorado, they continued their allegiance to the Golden Arches. But now, looking for a chance for expansion and a new exciting venture, that allegiance has shifted. Earlier this year, they became the proud franchisee owners of three Frozen Fusion stores located in the Las Vegas, Nev., area.

Frozen Fusion? Yes, the couple elected to start their multi-unit franchise career selling fruit smoothies – 25 different drinks and six different yogurt desserts, some of which feature protein, multivitamins and the nuevo nutrients Ginseng, Gingko Biloba. One of their stores, located in the ever busy Circus Circus Casino, provides them access to 600 daily customers, many of whom order lunch-time or dinner-time refreshments.

Tighter financing standards, better qualifying standards, better ideas about marketing and stronger commitments to franchisees make this an exciting time to launch a franchise.

A few hundred miles further west, Angela Tsui, a former florist shop owner, is realizing her dream of operating a store where she really has her heart. Before the beginning of summer, she held a private party at her brand new Frozen Fusion store in a Pasadena, Calif. strip mall. Nuzzled in the middle of several other franchise operations, her trendy store seems a David among Goliaths. Kinko, GNC and Starbucks stores are her neighbors. Using coupon promotions, a new attractive sign and capitalizing on the traffic generated by the other stores in the strip, she has seen sales rise by “30 to 40 percent each month,” she has been in business. Can that pace continue? No one knows for sure, but she already has begun searching for a site for another store she plans to launch soon.

The time is right for women and minorities in franchising, contend industry experts. Willing lenders, a strong economy, co-branding concepts and adventurous franchisors who seek to make a name for themselves among the giants are fueling this new market boom. What are the experts calling this movement? The third tier growth, or is it the fourth? No one seems to be able to agree, but most suggest this new movement is being built upon a foundation of success. Tighter financing standards, better qualifying standards, better ideas about marketing and stronger commitments to franchisees make this an exciting time to launch a franchise.

And the opportunities abound for minorities interested in a venture into business ownership. While many of the older more established franchisors may seem less attractive to prospective entrepreneurs who, with relatively limited finances only want to open one unit and are not initially prime candidates for multi-store operations, the newer, lesser established franchise concepts offer opportunity. Co-branding, the blending of two different franchise operations under one roof, new trendy or regional food concepts, video, quick business services and even daycare operations are the sources of this opportunity.

Lenders have played an important part in this growth boom. Some have made a commitment to expanding their SBA and other types of business loans. Even third-party lenders are being more liberal with their underwriting pens.

More is better for minorities and women seeking opportunities. Many of these new opportunities are coming with smaller, new companies. Wingstop Restaurants Inc., a Garland Texas-based take-out restaurant operation that has burgeoned to 14 stores and counting within months is one of them. With several new units going on line in the fall, the company expects to have successfully expanded to Mississippi and to have nearly 20 stores by year-end. Sporting a ‘40s and ‘50s aviation motif, the restaurants feature eight chicken wing flavors that can be ordered in 10, 20, 35, 50, 75 and 100 wing meal dishes that all fall within the $3.69 to $29.95 price range.

Wingstop offers franchisees somewhat flexible hours. There are no lunches with time-consuming food preparation for crowds on a tight time schedule. The hours are franchisee friendly. They do not open until 4 p.m. They close at midnight, allowing the franchisee to work a shift in the store and reducing the need for more employees.

“If a franchisee had to work every shift, it would be overly demanding on them”, explains James “Jim” Deering, director of operations. “Seventy-five percent of our business is take out. It was originally an operation decision the food would be cooked for 13-18 minutes, so lunch wouldn’t be easy in our business.”

Another fresh-faced operation is Frozen Fusion, a unit of Native Planet Foods Inc., a privately held company in Scottsdale, Ariz., that is owned by the Salt River Pima Maracopia tribe. Owned by proud Native Americans, they are quick to tout that more than half of their 25 stores are operated by women and minority franchisees. The company set the pattern with its 2,500 Ms Karen Yogurt shops.

But they are not alone. Established standbys such as GNC plan expansion. J.J. Sorrenti, director of franchise operations, says the company plans to have more than 2,000 stores by the end of next year. Some of those stores will be in urban areas and in some smaller remote places with 25,000 to 50,000 people. And to get a piece of that action, the franchisee needs only about $42,000 to $50,000 depending upon the location and other circumstances.“We are one of the few franchises offering lease signings and direct financing,” explains Sorrenti.

It was these types of important conveniences that attracted the Fredericks. “I called a lot of franchisors. It wasn’t uncommon for me to have a $200 phone bill,” explains Angela Fredericks. “We called Canada, the Bahamas, several islands. I called Canada I don’t know how many times. I didn’t care whether I had to call out of the country; I just wanted to find the right company. We wanted to find the right franchise operation and it wasn’t easy finding the right one.

“We decided on GNC because their number one selling point was service. We were looking for a franchisor that supported their franchisees. We discovered they had a low turnover rate. The company offered financial assistance. They do their own loans.” GNC worked out financing and helped the Fredericks to get set up in a strip shopping center in Dunedin, a small Florida burg that is the spring training home for the Philadelphia Phillies.

Even after selecting GNC, their search didn’t end there. Determined to find the right locations, the Fredericks rented a car and crisscrossed the state. North to Jacksonville, then down to Cocoa Beach, across to Deltona just outside of Orlando to Dunedin. Back and forth. From the Atlantic Coast side to the Gulf of Mexico side of the state. From the southern tip to the northern border they traveled.

“They gave us six different locations to pick from. They were helpful there too.” In business since January, the Fredericks already are looking over floor plans for a new store to open in the Dunedin area.

Direct financing is not a common feature for most franchisors. But, there are some prospective business owners who do not need it. Born in Hong Kong, Frozen Fusion’s Angela Tsui has always seen the U.S. as a land of opportunity. She financed her 906 square foot store with money she saved from her previous business operation. “We sold our flower store two years ago, but we knew we wanted to start another business. So we searched and searched until we found the right location. Our current location was originally planned for a juice bar.”

Although the strip center is located on a busy street, there is no easy access to the store. “It was a little slow during the first two weeks, but we put up a sign and used a coupon deal. Business has picked up since,” Tsui explains. “The challenge is to become known in the community. To do this I have advertised in the local newspaper, passed out flyers and have done buy-one, get the second half-off and a dollar single purchase.” Tsui’s venture is a solo endeavor, one she longed to have after nearly seven years in the flower shop business where she had a partner.

Multi-store ownership was a goal for Frozen Fusion’s Ken and Aubrey Turner. With the cost of a fast food restaurant, that goal wasn’t as feasible as with the cost of their new venture. Franchisees pay only a $25,000 franchise fee for a Frozen Fusion franchise. Those who can secure $75,000 can be in business.

Wingstop’s first franchisee is Pam McWhorter, a former school teacher who opened her restaurant in the Highland Village section of north Dallas 14 months ago. As with all new companies, there have been some growing pains, but the company was built to be a franchise operation says Deering. “The decision to franchise was made before the first company store opened. It was developed to become a franchise. We wanted this to be designed from the operator standpoint. Most franchise systems start when they create a business that is successful. We started this with franchising in mind.”

Location, location, location, the time-honored real estate adage plays big in Wingstop land. The stores are closer to where the population lives rather than where they shop, explains Deering. “Another net result is that real estate is less expensive for the franchisee.” Fees are only $50,000. While Wingstop doesn’t offer direct financing, SBA financing through Wells Fargo Bank has helped eager entrepreneurs become franchisees.

A special Enterprise Zone designation has helped Calvin Golden launch his business dream in a strip center in the south Dallas area. Strong support, business acumen and the right location has helped his operation soar. In recent weeks he has been busy nailing down details for his second location he hopes to open before year’s end.

A lot of companies talk about expanding with women and minorities, reasons GNC’s Fredericks. However, the real commitments come from companies that make their commitments available through the services they offer, says Angela Fredericks. “We were able to realize our dream because we researched, considered what would be the right match and seized the opportunity.”